The pace of UK takeovers picked up in the first quarter, with 15 companies currently in live bid situations and overseas buyers accounting for nearly half of all offers, according to a new report from Peel Hunt.
But the brokerage says there’s an urgent need for government action to stop the public markets from hollowing out.
The numbers highlight a growing imbalance: while acquisitions continue at speed - driven by depressed valuations and willing sellers - not a single new company with a market cap over £100 million floated in the first three months of the year.
That follows just three large IPOs in all of 2024.
Peel Hunt estimates that £9 billion of equity value is currently in play, with sectors such as real estate, healthcare and investment funds seeing the most bids.
Corporates, not private equity, made up 70% of buyers, although the broker expects financial buyers to return as funding conditions ease.
The consequences of this trend are clear. The number of companies on the FTSE SmallCap index, excluding investment trusts, has shrunk by more than a third since 2018.
AIM, once a vibrant market for growth companies, has lost 36% of its listings over the same period, with its market cap down 60% from its 2021 peak.
"AIM has been a very successful growth market, has supported the growth of a large number of companies, and there are still a large number of highly successful companies listed. However, it seems abundantly clear that it needs a proper reboot," the report states.
Peel Hunt says continued fund outflows are adding pressure, making takeover bids more attractive and raising questions about the UK’s ability to support growth companies.
Structural reform is urgently needed, the report states, calling for changes to pension and ISA rules, stamp duty, and the creation of a national wealth fund to revitalise the domestic equity market.
Without action, it warns, more British companies could exit public markets - either by being bought out or delisting entirely - leaving fewer investment options and weakening the broader ecosystem.
"The UK continues to be a happy hunting ground for both corporate and PE bidders, due to low valuations and willing sellers. We believe it is essential that the government urgently address the importance of UK capital to support UK companies," the report concludes.